Early savings add up for parents
GOOD money management is a valuable life skill all parents should pass on to their children.
That's the opinion of Buderim-based financial services firm Ellen Schafer and Associates senior financial advisor Julie Schafer.
She believes it is essential parents teach their children how to responsibly handle and save money.
The financial expert said it was never too early to start.
"I don't think they are ever too young to get an understanding of what currency is," she said.
Ms Schafer said instilling children with good money management practices early in life was the best way to prepare them for the financial responsibilities of adulthood.
When they were older and moved out of home, they would have an appreciation for money, be better able to handle commitments and be more financially savvy, she said.
"They will know they can't spend everything on pay day ... and understand if they want something they have to work for it," Ms Schafer said.
Opening a bank account or giving children a piggy bank to regularly deposit money into was the best start to encourage money-saving.
"Let children keep track of the money they put into the account, help them set and plan saving goals and regularly sit down with them and review their progress," Ms Schafer said.
"Pay them pocket money and help them work out how much they need to set aside and how much they are allowed to spend each week in order to achieve their short and long-term savings goals."
Pocket money also would teach them they had to "earn it to spend it".
The financial advisor suggested parents help their children understand currency and familiarise them with notes and coins.
"Because many transactions occur electronically, via internet banking, credit cards and eftpos, some kids rarely see their parents physically handling currency," Ms Schafer said.
If children rarely saw notes or coins being exchanged they, might find it difficult to grasp the concept of currency and think money came in an endless supply.
"It's about getting them familiar with the value of money. Things do have a price and that money has to be sourced from somewhere," Ms Schafer said.
When going on outings, she advised parents to give their kids a small amount for spending: "When they want to buy something, supervise, but let them approach the cash register and handle the transaction."
Lara Hodgson - a Maleny mother of two young boys, aged two and six, and publisher of online parenting directory Sunny Coast Kids - said she wanted her children to understood the value of money.
Ms Hodgson said she had taught her eldest child to think carefully before spending and the rewards of saving towards a goal instead of buying for instant gratification.
"I explain to him (when out on a shopping trip) that he has X number of dollars and let him know how far it can go. It was great to see him understand and work out that if he waited a bit longer, he could get what he really wanted," she said.
"I want them to learn that money doesn't grow on trees and that you have to work hard for it.
"It will set them up better in life and hopefully will keep them from buying a lot of rubbish they don't need by saving for what they really want. I wasn't taught the value of money and tend to spend more than I save. I believe my children should understand how hard it is to make money and how quickly you can spend it.
"It helps them understand that they can't just get everything they want, when they want. They may actually have to save for it."
Tips for parents on teaching kids about money:
1. Start early
2. Encourage saving
3. Pay pocket money
4. Show children how to budget
5. Help older kids get a part-time job.